Hovis and Mr Kipling group Premier Foods has served up an 11% rise in annual earnings as swingeing cost cuts helped offset a near-halving in profits in its troubled bread division.

The surplus at the Hovis business slumped 48% to £26.9m. But efforts to slash costs by £48m helped increase trading profits to £123.4m in 2012 and the group said it hopes to make "further progress" this year in the face of challenging markets.